System and method for processing and for funding a transaction

ABSTRACT

Method for processing a transaction, the method comprising automatically requesting a transfer from a source account to a destination account via a communication link, receiving the transfer, adjusting destination account data associated with the destination account by increasing a balance of the destination account by an amount of the transfer, receiving transaction data from a merchant indicating an attempted transaction, the transaction data including a transaction amount and data identifying the destination account, and processing the attempted transaction.

CROSS REFERENCE TO RELATED APPLICATION

The subject application is a Continuation of U.S. patent applicationSer. No. 11/170,937 filed Jun. 30, 2005, which is a Continuation in Partof U.S. patent application Ser. No. 10/822,999 filed Apr. 13, 2004, thecontents of which are hereby incorporated by reference in theirentireties.

FIELD

The present application relates to a banking system and method and, moreparticularly, to a system and method for providing transactional accessto an account.

BACKGROUND

Credit cards, debit cards and other types of transaction cards arecommonly used today by consumers to fund transactions at or withmerchants. When credit cards and debit cards are used by consumers,interchange rates are routinely imposed by a bankcard association. Aninterchange rate is generally a percentage of a transaction amount andthe percentage is set by the bankcard association. Acquiring banks arecharged the interchange rate for a consumer transaction by the cardassociation. An acquiring bank is a financial institution that contractswith merchants to settle electronic transactions. For credit cardtransactions, an acquiring bank provides the merchant with its creditcard processing account. This acquiring bank sends credit card andpurchase information for transactions to a card association (such asVisa® and MasterCard®), which forwards it to the issuer associated withthe credit card. The card association also collects interchange revenuedue to the interchange rate imposed for each transaction associated withthe respective credit or debit card and forwards at least a portion ofthat revenue to the issuer. Interchange rates for credit cardtransactions are commonly higher than interchange rates for debit cards.

Also commonly used today in the banking industry is automated clearinghouse (“ACH”) transactions. ACH is a form of electronic payment.Specifically, ACH is an electronic fund transfer through an ACH networkincluding the Federal Reserve Bank from one account to another account,such as to a checking or savings account. ACH is typically used toprocess payments for settlement within one or two business days. ACHtransactions are settled in a manner similar to the way checks aresettled: The clearinghouse takes all ACH files received daily from itsmember banks, sorts them by the originating bank (the bank where thecheck was cashed or deposited) and the paying bank (the bank againstwhich the check was drawn), totals the accounts, and credits or debitsappropriate accounts accordingly. A company can issue an ACH debit for apurchase amount through the ACH network to a customer's account at thecustomer's bank. A company can also initiate a purchase upon receipt ofan ACH credit.

Numerous financial institutions, such as credit card companies andbanks, and other companies, such as airline carriers, hotels andretailers, offer membership reward programs to their customers.Traditionally, membership reward programs are funded at least in part bythe interchange revenue collected by the respective financialinstitution. These membership reward programs often provide theirparticipants the ability to earn and accumulate units or portionsthereof that are operable as currency, such as points, stars and miles.Participants earn such units, for example, when conducting transactionswith a qualified account or engaging services with the qualifiedaccount. The units are redeemable for merchandise or services withparticipating merchants. Further, these membership reward programs offerother rewards to participants for being enrolled in the respectivereward program that do not involve the redemption of points or the like,such as a companion airline ticket upon purchasing an airline ticketwith a qualified account. Depending on the reward program enrolled in bya participant, certain rewards may not be available to the respectiveparticipant. For instance, program X may not offer particularmerchandise or services to its participants, whereas program y doesoffer such merchandise or services. A participant may use a transactioncard associated with the qualified account to conduct the respectivetransaction. Reward units typically accrue at a rate of one unit forevery dollar spent using the account and the accrued units operate ascurrency. Some entities restrict purchasing to particular merchants toearn reward units, whereas other financial institutions have no suchrestrictions. The maximum reward units a participant can earn annuallyare usually unlimited. Sometimes, however, a cap is imposed on theamount of reward units a participant can earn. Additionally, rewardunits usually do not accumulate on cash advances, convenience checks,balance transfers, fees or adjustments. When merchandise purchased withthe respective account is returned, the account credit will result in areduction of reward units.

Participants usually seek to accumulate enough reward units to purchasemerchandise or services. For instance, a participant may seek toaccumulate enough reward units to purchase a particular product from anassociated merchant or purchase an airline ticket from anotherassociated merchant. Depending on the program, only certain merchantsare considered qualified merchants with whom reward units can beredeemed towards a purchase.

Membership reward programs also often offer participants other rewards,incentives or the like instead of or in addition to the ability toaccumulate reward units. For example, some membership reward programsreturn to a participant a predetermined percentage of a transactionamount or of an amount spent during a predetermined period (referred toas “cash back”) either as a credit to an account or by check, offerparticipants discounts on select merchandise or services, andcomplimentary merchandise or services.

Typically, participants earn rewards when using transaction cardsassociated with a credit line, such as conventional credit cards. Fewdebit card issuers, however, offer rewards for use of their debit cardsat least in part because companies like Mastercard® and Visa® collectlower interchange revenue from merchants and consequently pay less tothe respective issuers. As a result, debit card issuers do not havesufficient revenue to fund programs such as rewards programs. Moreover,consumers commonly obtain their debit cards from the same banks whichprovide their checking or other demand deposit account.

Therefore, a need exists for a system and method that utilizes atransaction vehicle, for instance, a transaction card with aninterchange rate, associated with a destination account, the destinationaccount being funded on a predetermined basis, such as daily, weekly ormonthly, through ACH or otherwise by another account associated with theissuer of the transaction vehicle or a different financial institution.There is also a need to offer an account holder debit functionalitylinked to an account, such as the destination account, yet provide apredetermined delay before a transaction is funded through ACH orotherwise and a system and method for the account holder to challengethe validity of that respective transaction during the predetermineddelay. Accordingly, the account holder is provided with enhanced fraudprotection.

SUMMARY

An aspect of the present application provides for a method forprocessing a transaction, the method comprising receiving a transferfrom a source account via a communication link, adjusting destinationaccount data associated with a destination account by increasing abalance of the destination account by an amount of the transfer,receiving transaction data from a merchant indicating an attemptedtransaction, the transaction data including a transaction amount anddata identifying the destination account, and processing the attemptedtransaction.

Another aspect of the present application provides for a method forprocessing a transaction, the method comprising receiving transactiondata indicating an attempted transaction, the transaction data includinga transaction amount and data identifying a destination account,processing the attempted transaction; requesting a transfer for thetransaction amount to be transmitted from a source account to thedestination account; and receiving the transfer.

A further aspect of the present application provides for a method forprocessing a transaction, the method comprising receiving transactiondata from a merchant indicating an attempted transaction by an accountholder, the transaction data including a transaction amount and dataidentifying a destination account, processing the attempted transactionfor determining at least one source account to fund the transactionamount, the at least one source account and destination account beingassociated with different entities, requesting a transfer for thetransaction amount to be transmitted to the destination account from thedetermined at least one source account; and receiving the transfer.

BRIEF DESCRIPTION OF THE DRAWINGS

The present application can be more fully understood by reading thefollowing detailed description of the presently preferred embodimentstogether with the accompanying drawings, in which like referenceindicators are used to designate like elements, and in which:

FIG. 1 illustrates an exemplary transaction system according to theexemplary embodiments of the present application;

FIG. 2 illustrates an exemplary flow diagram for processing atransaction according to the exemplary embodiments of the presentapplication;

FIG. 3 illustrates another exemplary flow diagram for processing atransaction according to the exemplary embodiments of the presentapplication;

FIG. 4 illustrates in more detail the exemplary transaction system shownin FIG. 1;

FIG. 5 illustrates another exemplary transaction system; and

FIG. 6 illustrates an exemplary webpage providing an account holder theability to view a pending transaction and to challenge the validity ofthat transaction.

DETAILED DESCRIPTION

The exemplary embodiments of the present application are described withreference to an account holder having a plurality of accounts, includinga destination account, and having the ability to access the destinationaccount with various transaction vehicles, including, for instance, theuse of at least one associated transaction card. The account holder canuse the transaction card or other transaction vehicle, for example, tomake a purchase at or with a merchant. The appearance of the transactionvehicle can represent a credit card, a debit card, an ATM card, a smartcard and a fob, for instance a radio frequency identification (“RFID”)key fob, and, thus, is not meant to be limited to any particular type ofcard or other device and associated account. Transactions conducted withcertain types of transaction vehicles, however, are processed using aninterchange rate, as described herein in more detail. As is well knownin the art, some transactions can be conducted without presenting aphysical transaction vehicle at a point-of-sale (“POS”). Rather, anaccount holder can present a predetermined number or alphanumericcombination of letters and numbers associated with one or more accountsto perform a transaction. Further, transaction vehicles can beadministered by various companies, such as banks, credit card companies,or other institutions or companies.

As described above, the exemplary embodiments of the present applicationare described with reference to an account holder having a destinationaccount that can be accessed with a variety of transaction vehicles,including, for instance, using a transaction card. The destinationaccount can be funded by one or more source accounts previouslyspecified by the account holder. The account holder can add to or removefrom the list of available one or more source accounts linked to thedestination account. In an exemplary embodiment, the destination accountis funded to cover an amount of a transaction after the account holderinitiates the transaction.

FIG. 1 illustrates an exemplary transaction system 100 according to theexemplary embodiments of the present application. Transaction system 100includes merchant 110, financial institution A 125 in communication,either directly or indirectly, with merchant 110 via communication link115, for example, a debit network, a credit network or a debit andcredit network, and financial institution B 150. Communication link 115or a portion of communication link 115 can be a landline link, awireless link or a combination thereof. Financial institution A 125includes processing unit 120, interest determination unit 130, rewarddetermination unit 135 and memory unit 170 having stored therein sourceaccount data 140 and destination account data 145. Source account datais associated with at least one source account, including for instancesource account 425, and destination account data 145 is associated withdestination account 410, depicted in FIG. 4. Alternatively, thefunctionality provided by interest determination unit 130 and rewarddetermination unit 135 can instead be provided by processing unit 120 orin conjunction with processing unit 120. Financial institution B 150includes processing unit 155 in communication, either directly orindirectly, with memory unit 160 having stored therein source accountdata 175. Source account data 175 is associated with at least one sourceaccount, including for instance source account 415, also shown in FIG.4. Destination account 410 can also be associated with a third partyinstead of financial institution A 125.

Financial institution A 125 transmits data to and receives data, forinstance, transfer 435 as shown in FIG. 4, from financial institution B150 via communication link 165. The use of communication link 115, suchas a debit network, a credit network or a debit and credit network, fortransmitting and for processing credit and debit transaction data iswell known in the art and therefore is not described in detail herein.Similarly, the use of communication link 165, such as an ACH network,for transmitting and for processing transfer 435 is well known in theart and hence is also not described in detail herein. The presentapplication is not limited to using an ACH network to transfer funds inor out a destination account and a debit network, a credit network or adebit and credit network for an account holder to access the destinationaccount. Rather, funds can be transferred in or out of the destinationaccount in any manner. Exemplary communication links for transferringfunds in or out of the destination account include wiring, ACH,electronic funds transfer, ATM networks, Visa®, MasterCard® or the like.

Transaction card 105 is operable for account holder 180 to purchase ator with merchant 110 to cause data to be transmitted to and fromfinancial institution A 125 regarding that transaction. Financialinstitution A 125 issues to account holder 180 transaction card 105,financial institution A 125 being a credit card company, a bank, amortgage company or any other type of financial institution or company.Like financial institution A 125, financial institution B 150 is linkedto financial institution A 125 and can be a credit card company, a bank,a mortgage company or any other type of financial institution orcompany.

Memory unit 170 and memory unit 160 associated with financialinstitution A 125 and financial institution B 150, respectively, caninclude various types of memory storage devices, for example, one ormore databases, relational or otherwise and, therefore, is not meant tobe limited to any particular type of storage device or quantity ofstorage devices operating alone or in combination. Memory unit 170stores data including, for instance, source account data 140 anddestination account data 145, and memory unit 160 stores data including,for example, source account data 175. As will be appreciated by a personhaving ordinary skill in the art, memory unit 170 and memory unit 160can store other data associated with account holder 180, such aspersonal data, transaction history data, security data and dataassociated with accumulated and redeemed rewards. Memory unit 170 and/ormemory unit 160 can also store data associated with one or moreadditional source accounts that are linked to the destination account,the one or more additional source accounts being associated withfinancial institution A 125 and/or financial institution B 150. As willbe described in more detail herein, a source account can be associatedwith another entity besides financial institution A 125 and financialinstitution B 150, as described in the present application withreference to FIG. 5.

Communication link 115 can be a debit network, a credit network or adebit and credit network including the MasterCard®/Visa® network orother proprietary networks, such as Plus, Novus (debit), Diner's Club®(credit) and American Express®, the operation and use of which are wellknown in the art and are, thus, not described herein. Transaction dataassociated with a transaction between account holder 180 and merchant110 is transmitted using communication link 115. The present applicationis not limited to using a debit network, a credit network or a debit andcredit network or other proprietary networks. Rather, an ACH network,Internet based payment networks, processor based payment networks, forinstance, the First Data network, could be used instead of or incombination with the debit network, the credit network or the debit andcredit network. For instance, transaction data can also be transmittedthrough an Internet link, through a mail link and through a telephonelink instead of a debit/credit network or in combination with adebit/credit network.

The components of FIG. 1 may be implemented through hardware, software,and/or firmware. The components in transaction system 100 are notlimited to those illustrated.

FIG. 2 illustrates an exemplary flow diagram for processing and forfunding a transaction according to the exemplary embodiments of thepresent application. Financial institution A 125 is in communicationwith financial institution B 150 so that funds can be electronicallytransferred to or from the respective financial institution viacommunication link 165. In an exemplary embodiment, fund transfers occurautomatically on a recurring basis at a predetermined time, forinstance, daily, weekly, monthly or yearly, or a combination thereof, asdescribed herein in more detail. Alternatively, fund transfers can occurupon request, as opposed to automatically, for example, by accountholder 180, by financial institution A 125 and/or by financialinstitution B 150, also described herein in more detail with referenceto FIG. 3.

In FIG. 2, transfer 435 occurs automatically at a predetermined time fora predetermined amount before a transaction is attempted by accountholder 180. The automatic transfer 435 is either initiated by financialinstitution A 125 via request 430, described herein with reference to205-215, or is initiated by financial institution B 165, as describedherein with reference to 220-225. When initiated by financialinstitution A 125 by request 430, a predetermined amount of funds arerequested by processing unit 120 to be transferred to destinationaccount 410 associated with financial institution A 125 from sourceaccount 415 associated with financial institution B 150, in 205, asshown in FIG. 2. Processing unit 120 receives the requested transferfrom financial institution B 150, in 210, and updates destinationaccount data 145 stored in memory unit 170 associated with accountholder 180 by increasing the stored balance data by the amount oftransfer 435, in 215. Further, processing unit 155 of financialinstitution B 150 updates source account 415, in particular, sourceaccount data 175 stored in memory unit 160, also associated with accountholder 180 by decreasing the stored balance data by the amount oftransfer 435. In an exemplary embodiment of the present application, theamount of the automatic transfer 435 is determined by the respectiveaccount holder, for instance, account holder 180, and the predeterminedtime, for instance, daily, weekly, monthly or yearly, when transfer 435occurs is also determined by that account holder. Alternatively, theamount of transfer 435 is not predetermined by account holder 180.

When financial institution B 150 initiates transfer 435, processing unit155 of financial institution B 150 automatically transfers thepredetermined amount of funds from source account 415 to destinationaccount 410 at financial institution A 125 at the predetermined time viatransfer 435 through communication link 165. Transfer 435 is received byprocessing unit 120, in 220. Similar to when financial institution A 125initiates transfer 435, processing unit 120 adjusts destination accountdata 145 including the balance data by increasing the balance data bythe amount of transfer 435, in 225. Also, processing unit 155 adjustssource account data 175 by decreasing the stored balance data by theamount of transfer 435.

Thus, processing unit 120 of financial institution A 125 canautomatically request the transfer of the predetermined amount of fundsfrom source account 415 to destination account 410 via transfer 435 atthe predetermined time or processing unit 155 of financial institution B150 can automatically transfer the predetermined amount of funds fromsource account 415 to destination account 410 at financial institution A125 via transfer 435 at the predetermined time, as described herein. Inboth instances, an account balance of destination account 410 isincreased which is reflected by destination account data 145 stored inmemory unit 170. Accordingly, funds will be available for account holder180 to conduct at least one transaction at or with merchant 110. Thetransaction may have imposed thereon a credit card interchange rate iftransaction card 105 is, for instance, operable as a credit card.Alternatively, an interchange rate other than a credit card interchangerate is imposed, for instance, a debit card interchange rate. In afurther alternative embodiment, the transaction is not imposed with anyinterchange rate regardless whether the transaction is initiated byaccount holder 180 with a transaction card or without a transaction cardor other transaction vehicle.

As shown in FIG. 2, after the occurrence of transfer 435, account holder180 can present transaction card 105 to merchant 110, for instance, at aPOS for conducting a transaction with merchant 110. A device or deviceslocated at merchant 110, such as a POS terminal, read a magnetic stripelocated on transaction card 105 or a memory unit located on transactioncard 105 if transaction card 105 is a smart card or the like.Transaction data including at least a transaction amount and an accountnumber associated with transaction card 105 is received by processingunit 120 of financial institution A 125 via communication link 115, in230. In an exemplary embodiment, the received account number isassociated with destination account 410 and destination account data 145stored in memory unit 170. The account number, however, can beassociated with another account linked to destination account 410.

In transaction system 100, a credit card interchange rate may be imposedfor the transaction conducted by account holder 180 at merchant 110using transaction card 105. Accordingly, the interchange revenue earnedby the issuer of transaction card 105, for instance, financialinstitution 125, may be greater than the interchange revenue earned froma debit card interchange rate.

The present application, however, is not limited to using a transactionvehicle such as transaction card 105 to access destination account 410.Destination account 410 can be accessible to account holder 180 invariety of ways including, for example, by check, via the Internet, viaan automated teller machine, via an RFID fob, in-person, for instance,at a bank branch or the like, by interacting with a customer servicerepresentative or voice response unit, a direct host-to-host connection,wireless communication with a bank processor, for example, viaBlackberry, a personal digital assistant or wireless telephone, or anyother method for accessing an account regardless of the type of account.Destination account 410 may be used, for instance, to make on-line billpayments.

Once the transaction data is received by processing unit 120, in 230,processing unit 120 processes the attempted transaction by accountholder 180, in 235. Specifically, processing unit 120 determines fromthe received transaction data the account number associated withtransaction card 105 used by account holder 180 at merchant 110 and thetransaction amount. Since in an exemplary embodiment the account numberis associated with destination account 410, processing unit 120 accessesdestination account data 145 stored in memory unit 170 to determinewhether to authorize the attempted transaction, in 240. Moreparticularly, processing unit 120 compares the balance of destinationaccount 410 to the transaction amount to determine whether the balanceis greater than or equal to the transaction amount. If the balance ofdestination account 410 is greater than or equal to the transactionamount, then processing unit 120 authorizes the attempted transactionand transmits authorization data to merchant 110 via communication link115, in 250. As will be appreciated by a person having ordinary skill inthe art, if account holder 180 initiated the transaction in a mannerthat does not necessitate the use of communication link 115,communication link 115 is not utilized, for example, if account holder180 initiates the transaction by check or in-person. If, however, thebalance of destination account 410 is less than the transaction amount,then processing unit 120 denies the attempted transaction and transmitsdenial data to merchant 110 via communication link 115, in 245.

Alternatively, if the balance of destination account 410 is less thanthe amount of the attempted transaction, a credit line associated withfinancial institution A 125 or financial institution B 150, or anotherdemand deposit account associated with account holder 180 is accessed byprocessing unit 120 to cover the amount of the attempted transaction ora portion thereof not covered by the balance of destination account 410.Account holder 180 can also be charged a predetermined transaction feefor utilizing the overdraft protection benefit associated withtransaction card 105. The credit line or demand deposit account may ormay not be linked to only destination account 145 or be operable foronly serving an overdraft protection function.

Destination account 410 may have a balance reflected by destinationaccount data 145, described herein with reference to FIGS. 2-4. In anexemplary embodiment, if destination account 410 has a balance, accountholder 180 earns interest at a fixed or variable interest rate on theaccount balance. The fixed or variable interest rate can be determinedby financial institution A 125 or determined based in whole or in parton any other known method for determining interest rates on depositedfunds. Interest determination unit 130 determines an amount of interestthat has accrued on a balance of destination account 145 at apredetermined time, for instance, on a daily, weekly, monthly or yearlybasis. Thereafter, processing unit 120 receives data from interestdetermination unit 130 indicating the accrued interest and stores thisdata in memory unit 170 in association with destination account 410 sothat destination account data 145 reflects the increase in the accountbalance.

In an alternative embodiment described in more detail herein withreference to FIG. 3, funds are transferred from source account 415 todestination account 410 by transfer 435 only upon request by accountholder 180 after (or before) a respective attempted transaction byaccount holder 180. In a further alternative embodiment, funds aretransferred from source account 415 to destination account 410 byfinancial institution A 125 or by financial institution B 150automatically after account holder 180 initiates the transaction withmerchant 180. For instance, upon processing unit 120 receiving data frommerchant 110 indicating a transaction amount, processing unit 120automatically transmits request 430 to processing unit 155 requesting atransfer equal to the transaction amount be transferred to destinationaccount 410. Alternatively, account holder 180 can contact financialinstitution A 125 or financial institution B 150 to request transfer 435for a specific amount of money at least equal to the transaction amount.Account holder 180 can also request when transfer 435 should occur toassure that the appropriate funds are present in destination account 410for covering the transaction amount and/or any future transactions usingtransaction card 105 or other transaction vehicle at merchant 110.

In the exemplary embodiments of the present application, the funds aretransferred out of destination account on daily basis, hourly basis orless. As a result, destination account 410 is operable as a pass-throughaccount and therefore can have a balance for no period of time or for alimited period of time. As will be appreciated by a person havingordinary skill in the art, destination account 410 may not have fundsdeposited therein. Rather, destination account 410 may have, forexample, debit units or a negative amount so that the appropriateentity, such as financial institution A 125, keeps track of how much ispaid out and how much to request from the respective source account(s)of account holder 180.

FIG. 3 illustrates another exemplary flow diagram for processing and forfunding a transaction according to the exemplary embodiments of thepresent application. As shown in FIG. 3, like the exemplary embodimentdescribed herein with reference to FIG. 2, transaction data including atleast a transaction amount and an account number is received byprocessing unit 120 of financial institution A 125 via communicationlink 115 or otherwise depending on the transaction vehicle used byaccount holder 180, in 310.

Processing unit 120 then requests transfer 435 by transmitting request430 for an amount equal to the transaction amount to be electronicallytransferred from source account 415 associated with financialinstitution B 150, or other source account as described in the presentapplication with reference to FIG. 5, to destination account 410associated with financial institution A 125, in 315. Transfer 435 canresult either from account holder 180 requesting the transfer or fromfinancial institution A 125 requesting the transfer. Processing unit 120through processing unit 155 associated with financial institution B 150checks the balance of source account 415, or through a processing unitof another financial institution if another source account is beingchecked, to determine if the respective source account is sufficient forfunding the transaction. As will be appreciated by a person havingordinary skill in the art, various systems and methods can be used tocheck the balance of an account associated with a third party and thepresent application is not meant to be limited to any particular systemor method. One exemplary system and method is offered by CashEdge. If itis determined that the balance or credit line of source account 415 issufficient to fund the transaction, then processing unit 120 thereafterreceives the funds through transfer 435 via communication link 165 orotherwise, in 320. If it is determined that the balance or credit lineof source account 415 is not sufficient to fund the transaction, acredit line associated with financial institution A 125 or financialinstitution B 150, or another demand account associated with accountholder 180 is accessed by processing unit 120 to cover the amount of theattempted transaction or a portion thereof. Account holder 180 can alsobe charged a predetermined transaction fee for utilizing the overdraftprotection benefit associated with transaction card 105. The credit lineor deposit account may or may not be linked to only destination account145 or be operable for only serving an overdraft protection function.Also, the deposit account may or may not be a checking account.

In the exemplary embodiments described with reference to FIGS. 2 and 3,an account holder can be offered debit functionality linked to anaccount, such as destination account 410, yet provided a predetermineddelay before the transaction is funded through ACH or otherwise andprovided a system and method for the account holder to challenge thevalidity of the respective transaction during the predetermined delay.Accordingly, the account holder is provided with enhanced fraudprotection.

The predetermined delay is provided during the settlement phase of atransaction. The following is an exemplary transaction and settlementprocess for the exemplary embodiments described in the presentapplication and is used for explanary purposes only and therefore is notmeant to limit the scope of the present application. In the followingexample, the participants are financial institution A 125 (a transactionvehicle issuer), account holder 180, merchant 110, a merchant acquirer,a card association, a host system, financial institution B 150 (anaccount holder bank) and a third party agent. The role of the merchantacquirer, the card association and the host system in the transactionand settlement process are well known in the art and therefore are notdescribed in detail in the present application and not shown in thedrawings.

Account holder 180 uses transaction card 105 at merchant 110 to make a$100 purchase. A POS terminal at merchant 110 sends a request forapproval to the merchant acquirer. The merchant acquirer forwards therequest for approval to the card association, for instance, forPIN/Debit networks, the request is sent to Star, Interlink, Maestro orCirrus, and for signature Debit, the request is sent to Visa® orMasterCard®. The card association routes the request for approval to thehost system. The host system, for instance, associated with First Data®Corporation or Metavante®, serves as the agent for financial institutionA 125. Alternatively, financial institution A 125 serves as the hostsystem.

The host system determines if account holder 180 is within a spendinglimit for the respective account, such as destination account 410. Thespending limit for a given day is provided to the host system in a batchfile by financial institution A 125 the night before. Alternatively, thehost system calculates an internal spending limit, including cumulativepurchases up until a final batch sent to financial institution A 125 atday's end. If within the spending limit, the host system sends approvalback to the card association, which returns approval to the merchantacquirer, which returns approval to merchant 110. If not within thespending limit, a decline is sent. Alternatively, the host system sendsan alert to account holder 180 notifying account holder 180 that he orshe is approaching the spending limit. Merchant 110 providesgoods/services to account holder 180.

An exemplary settlement process is as follows. The host system sends $98through the card association. The host system pulls money from thepooled account at financial institution A 125. The card associationforwards $97 to the merchant acquirer, that is, the card associationmakes $1. The merchant acquirer places $97 in an account of merchant110. The merchant acquirer makes money from the banking relationship orother contract with merchant 110. The host system sends an ACH requestto financial institution A 125 for payment of $98 on the $100 purchase.The ACH request is sent at the end of day, in batch, by account numberand amount spent for account holder 180. Alternatively, the ACH requestis sent real-time upon approval. The transaction vehicle issuer sends$98 to the host system either at the end of the day in batch oralternatively in real time.

Financial institution A 125 sends an ACH request to financialinstitution B 150 for $100. The ACH request, however, is sent after apredetermined delay. In the present application, the predetermined delayis not limited to any particular time and, therefore, can be any numberof hours or days. Also, the predetermined delay can commence whenpayment is made to the host system or otherwise. The predetermined delayprovides account holder 180 the ability to review one or moretransactions, for example, by accessing a web page, verify that thosetransactions are valid, for example, belong to account holder 180, andfunctionality for account holder 180 to challenge any one of thosetransactions if wrong before final withdraw from financial institution B150 or elsewhere. FIG. 6 illustrates an exemplary web page 600 thatprovides account holder 180 with the ability to challenge one or moretransactions. As can be seen in FIG. 6, account holder 180 can click onone or more of the hyperlinks 610 a . . . 610 d associated with one ormore of the respective transactions 610 a . . . 610 d to challenge thattransaction. Account holder 180 may be presented with a confirmationquestion to verify and confirm that account holder 180 truly wants tochallenge a respective transaction. As a result of clicking on aparticular hyperlink during the predetermined period of delay, the fundsare not removed from the account at the account holder bank. Todetermine whether a fraud has been committed, any fraud resolutionprocess, for instance, those processes known in the art that areimplemented when an individual disputes a debit transaction associatedwith a debit card or a credit transaction associated with a credit card,can be used with the exemplary embodiments of the present application.Such fraud resolution processes are well known to a person havingordinary skill in the art and are, therefore, not described in detail inthe present application.

Alternatively, a third party agent, for example, CashEdge, sends an ACHrequest to financial institution B 150 or elsewhere. The ACH requestscan be batched by account holder. In a further alternative embodiment,third party agent or other entity uses screen scraping to determine ifaccount holder 180 has enough available funds in the respective accountat financial institution B 150 or elsewhere to complete the ACH request,that is, a service such as CashEdge will login to financial institutionB 150 or elsewhere with account holder information provided by accountholder 180 and will check the balance from predetermined configurations.

If account holder 180 has insufficient funds in the account at financialinstitution B 150, the transaction vehicle issuer resends the ACHrequest, for instance, daily, to complete the draft until full funds areavailable. If or when account holder 180 has sufficient funds in theaccount at financial institution B 150 or elsewhere, the account holderbank sends $100 to transaction vehicle issuer from the account atfinancial institution B 150 or elsewhere. In this example, financialinstitution A 125 makes $2 on the transaction.

Additional source accounts other than source account 425 and sourceaccount 415 are linked to destination account 410 and can funddestination account 410, as shown in FIG. 5. FIG. 5 illustratesfinancial institution A 125 being linked to a plurality of otherfinancial institutions-financial institutions 515 a . . . 515 n.Accordingly, financial institution A 125 can submit requests 505 a . . .505 n to financial institutions 515 a . . . 515 n, respectively, forfunds to be transferred and financial institutions 515 a . . . 515 n cantransmit fund transfers 510 a-510 n, respectively, to financialinstitution A 125. As will be appreciated by a person having ordinaryskill in the art, source account 425, source account 415 and any of theadditional source accounts 520 . . . 520 n can be replaced by accountholder 180 or, alternatively, account holder 180 can add other sourceaccounts as desired.

In an exemplary embodiment of the present application, processing unit120 associated with financial institution A 125 determines which sourceaccount or source accounts amongst the plurality of source accounts 425,415, 520 a . . . 520 n to submit a request for a fund transfer.Processing unit 120 can proceed in a predetermined sequential order whendetermining which of the plurality of source accounts to submit arequest or according to any other predefined instructions, or canrandomly select a source account amongst the plurality of sourceaccounts. For instance, processing unit 120 can access a predefinedsequential order stored in memory unit 170, source account 520 a beingfirst in the order. Thereafter, processing unit 120 requests transfer510 a by transmitting request 505 a for an amount equal to thetransaction amount to be electronically transferred from source account520 a associated with financial institution 515 a to destination account410 associated with financial institution A 125. If processing unit 120determines that the balance or credit line of source account 520 a isless than the transaction amount, then processing unit 120 can accessone or more other source accounts in the predefined sequential order forthe entire transaction amount or a portion thereof until the transactionamount can be funded. Furthermore, a source account may be chosen basedon transaction amount, based on transaction type, for example,point-of-sale, card not present, Internet or mail order, or based onmerchant type. A predetermined percentage from multiple source accountscan also used to fund the transaction amount.

Again referring to FIG. 4, processing unit 120 updates destinationaccount data 145 stored in memory unit 170 associated with accountholder 180 by increasing the stored balance data by the amount oftransfer 435 or one or more other transfers, in 325. Further, processingunit 155 of financial institution B 150 updates source account data 175stored in memory unit 160, or one or more other source accounts, alsoassociated with account holder 180 by decreasing the stored balance databy the amount of the transfer. Processing unit 120 then authorizes theattempted transaction and transmits authorization data to merchant 110via communication link 115, in 330. Alternatively, the authorizationdata is transmitted before receiving funds in 320 or before requestingtransfer 435 or one or more other transfers in 315. Before or aftertransmitting the authorization data, processing unit 120 again updatesdestination account data 145 stored in memory unit 170 associated withaccount holder 180 by decreasing the stored balance data by thetransaction amount, in 325. In an alternative embodiment, processingunit 120 does not update the balance data of destination account 410,for instance, by first increasing the balance data and then decreasingthe balance data by the same amount, as described herein with referenceto 325 and 335. Rather, the balance data is not altered for the netresult of the balance is the same.

Besides requesting transfer 435, 510 a . . . 510 n on a per transactionbasis, transfer 435, 510 a . . . 510 n can occur once a day, forexample, at the end of the day, for an amount equal to the cumulativeamount of all transactions conducted by account holder 180 during thatrespective day. Alternatively, transfer 435, 510 a . . . 510 n can occurafter a predetermined number of hours or days have elapsed, the amountof transfer 435, 510 a . . . 510 n equaling the cumulative amount of alltransactions conducted by account holder 180 during the predeterminednumber of hours or days preceding the transfer. Transaction system 100can also impose a transaction volume limit for destination account 410,for example, no more than a predetermined number of transactions byaccount holder 180 per day, and can impose a transaction amount limit ondestination account 410, for example, no transaction amounts exceeding apredetermined amount or the cumulative value of transactions over apredetermined period of time cannot exceed a particular amount.

In another exemplary embodiment of the present application, the sourceaccount from which a predetermined amount of money originates isassociated with financial institution A 125, as opposed to financialinstitution B 150. For example, source account data 140 associated withsource account 425 is stored in memory unit 170 of financial institutionA 125, as depicted in FIG. 1. As a result, processing unit 120 eitherautomatically or upon request by account holder 180 request transfersfrom source account 425 to destination account 410 or automaticallyreceives transfers from source account 425 as described herein withreference to FIGS. 2 and 3. As will be appreciated by a person havingordinary skill in the art, funds can be transferred internally within afinancial institution or funds can be transferred from one accountassociated with the institution to another account associated with thesame institution using communication link 165.

Destination account 410 may have a balance reflected by destinationaccount data 145, described herein with reference to FIGS. 2-5. In anexemplary embodiment, if destination account 410 has a balance, accountholder 180 earns interest at a fixed or variable interest rate on theaccount balance. For example, destination account 410 has a balance ifthe amount of transfer 435, 510 a . . . 510 n exceeds the amount of atransaction or transactions that need to be funded or the funds remaindeposited in destination account 410 for a period of time before thefunds are used to remunerate merchant 110. The fixed or variableinterest rate can be determined by financial institution A 125 ordetermined based in whole or in part on any other known method fordetermining interest rates on deposited funds. Interest determinationunit 130 determines an amount of interest that has accrued on a balanceof destination account 145 at a predetermined time, for instance, on adaily, weekly, monthly or yearly basis. Thereafter, processing unit 120receives data from interest determination unit 130 indicating theaccrued interest and stores this data in memory unit 170 in associationwith destination account 410 so that destination account data 145reflects the increase in the account balance.

As can be seen in FIG. 1, processing unit 120 is also coupled to rewarddetermination unit 135. In an exemplary embodiment, reward determinationunit 135 determines whether a respective account holder, for example,account holder 180, is entitled to a reward. If it is determined thataccount holder 180 is entitled to a reward, the particular reward isdetermined by reward determination unit 135 and then associated with anaccount, such as a reward account, of account holder 180 so that accountholder 180 can later redeem the reward.

Transactions conducted by account holder 180 using a transactionvehicle, such as transaction card 105 or an associated account number,are processed using an interchange rate, as described in the presentapplication. The use of a high interchange rate, for instance, a creditinterchange rate, as opposed to a lower interchange rate, such as adebit interchange rate, affords issuers, such as financial institution125, a financial benefit and these issuers extend reward opportunitiesassociated with a reward program to account holders like account holder180. As will be appreciated by a person having ordinary skill in theart, any interchange rate which provides a greater financial benefit tothe respective financial institution can be used regardless of thenomenclature, for instance, regardless whether the interchange rate isreferred to as a credit or a debit interchange rate.

In an exemplary embodiment, account holder 180 participates in a rewardprogram associated with financial institution A 125 and thereby earnsrewards, incentives or the like, for instance, by engaging intransactions with merchants, such as merchant 110, using a transactionvehicle, such as transaction card 105, associated with a qualifiedfinancial account, for instance, destination account 410, and laterredeeming those accumulated rewards, incentives or the like withmerchant 110 or with other merchants. Under the reward program, accountholder 180 has the ability to earn a plurality of reward units, such aspoints, for example, for purchases with merchant 110 and other merchantsusing a qualified financial account—destination account 410 as describedherein.

The present application is applicable, to any institution or companyhaving a membership reward program associated therewith, includingfinancial institutions, airlines, supermarkets, hotels, car rentalcompanies, retail stores, Internet loyalty programs, loyalty providers,such as Carlson Companies, Inc. and Cendant Corporation, and Visa® andMasterCard® that offer rewards, incentives or the like. In an exemplaryembodiment of the present application, the membership reward program ismanaged directly by the institution or company, for instance, financialinstitution A 125. Alternatively, the membership reward program ismanaged by a third party associated with financial institution A 125.Financial institution A 125 may or may not be in a partnership with athird party and/or other party. For instance, in the event financialinstitution A 125 has a partnership relationship with the third partyand/or other party, the relationship may involve a co-branding.

The membership reward program can also be operable as an independentreward program, as an accelerator reward program, as a coalition rewardprogram or otherwise, or as a combination thereof. As would beappreciated by a person having ordinary skill in the art, when enrolledin an accelerator program, an account holder accelerates the earning ofreward units or the like in another reward program independent of theaccelerator program, for example, when conducting transactions with anaccount linked to the accelerator program. A coalition reward program,such as Upromise (www.upromise.com), is operable for account holders toearn rewards from a particular suite of merchants. Other reward programscan be associated with the coalition reward program. When an accountholder conducts a transaction with one of the merchants within the suiteusing one of these other reward programs, that account holder earnsadditional rewards. For instance, a reward program associated with acoalition reward program is operable for account holders to earn X % forevery transaction regardless of the merchant and an additional Y % fortransactions conducted with one of the merchants within the suite and anadditional Z % at another one of the merchants within the suite.

Accordingly, two or more membership reward programs can be linkedtogether so that account holder 180 earns reward units or the like in asingle rewards account from various sources.

The exemplary embodiments of the present application are describedherein with reference to reward units as being points, and earning andredeeming the same. The present application, however, is not limited topoints, as points are units merely symbolizing a form of currency foruse towards transactions. Hence, other symbols operable as currency areequally applicable to the exemplary embodiments of the presentapplication, for instance, miles, stars, dollars, cash, rebates orcredits.

In an exemplary embodiment, account holder 180 participating in themembership reward program earns (and redeems) points when conductingtransactions with merchant 110 and other merchants. These points areearned by account holder 180, for example, upon account holder 180conducting transactions with merchant 110 using destination account 410.Earning and redeeming currency units, such as points, associated with amembership reward program are well known in the art and are thereforenot described in detail herein. Account holder 180 can also earn andredeem other rewards, including, for example, gift certificates,coupons, companion airplane tickets, or other goods or services. Thepresent application is not limited to these rewards, as they are merelyexemplary. Also, in an alternative embodiment, account holder 180 maynot participate with any reward program and therefore not have theability to earn and redeem rewards.

According to the embodiments described in the present application,transaction system 100 is operable for an institution (for example,financial institution A 125) other than the institution (for example,financial institution B 150) offering account holder 180 an account (forexample, source account 415), such as a checking account, to issue oneor more transaction vehicles, for example, a transaction card, linked tothis account through communication link 165. Destination account 410 isoperable as a pass-through account in that one or more source accounts,such as source accounts 425, 415, 520 a . . . 520 n, can be used to fundtransactions initiated with the transaction vehicle and as a resultdestination account 410 does not have a balance or has a balance forlimited period of time.

In an exemplary embodiment, when the transaction vehicle is transactioncard 105 and a credit interchange rate is used, to merchant 110,transaction card 105 appears as a credit card and is processed as acredit card since the credit card interchange rate is imposed on eachtransaction. To account holder 180, though, transaction card 105operates like a debit card, because with every transaction, at the endof each day or at some other time, a transaction, for example, an ACHtransaction, would debit source account 415 of account holder 180 forthe amount of the purchase(s). Hence, transaction card 105 is, forexample, a credit card behaving like a debit card due to the use of ACH.The use of communication link 165 enables account holder 180 flexibilityin that account holder 180 can get a transaction card from oneinstitution, for example, a credit card company, while having his or herdemand deposit account or other type of account at another institution,such as a bank.

The embodiments described above are illustrative examples of the presentapplication and it should not be construed that the present applicationis limited to these particular embodiments. Various changes andmodifications may be effected by one skilled in the art withoutdeparting from the spirit or scope of the invention as defined in theappended claims.

We claim:
 1. A method for processing a purchase transaction between anaccount holder and a merchant, the method comprising: receiving apurchase transaction initiation via a radio frequency identificationsignal from a transaction card associated with the account holder forthe purchase transaction between the account holder and the merchant;identifying purchase transaction data comprising a transaction amountand data identifying the account holder in response to the purchasetransaction initiation; identifying a credit account and a demanddeposit account, the credit account and the demand deposit account eachassociated with the account holder, the credit account being associatedwith and including credit account data stored in one or more memoryunits of a first financial institution and the demand deposit accountbeing associated with and including debit account data stored in one ormore memory units of a second financial institution in response toreceiving the purchase transaction initiation and identifying thepurchase transaction data; requesting, using one or more computerprocessors and from the first financial institution, payment of at leasta portion of the transaction amount associated with the purchasetransaction initiated by the account holder with the merchant using thecredit account in response to receiving the purchase transactioninitiation; requesting, from the second financial institution, a requestfor an automated clearing house transfer of the transaction amount fromthe second financial institution to the first financial institution, therequest made via an automated clearing house network after apredetermined delay period; providing authorization data to themerchant; initiating the predetermined delay period in response toproviding the authorization data; receiving an online user interface ona device of the account holder, from the first financial institution, toenable the account holder to review the purchase transaction anddetermine whether to challenge the purchase transaction, the online userinterface including a hyperlink that when clicked by the account holderinitiates a challenge process indicating that the account holderbelieves the purchase transaction is fraudulent; automaticallytransmitting the request upon expiration of the predetermined delayperiod when the hyperlink is not clicked by the account holder duringthe predetermined delay period; initiating a fraud resolution processwhen the account holder clicks the hyperlink during the predetermineddelay period and automatically transmitting the request when no fraud isdetermined during the fraud resolution process; initiating the fraudresolution process when the account holder clicks the hyperlink duringthe predetermined delay period and not withdrawing the transactionamount from the second financial institution by not processing therequest when fraud is determined during the fraud resolution process;completing the automated clearing house transfer via the automatedclearing house network; and causing one of the first financialinstitution and the second financial institution to update the creditaccount data and demand deposit account data stored in the one or morememory units of the respective financial institutions by effectuating anincrease or decrease thereof, respectively, based on the automatedclearing house transfer of the transaction amount.
 2. The method ofclaim 1, wherein the demand deposit account is a checking account,savings account, or money market account.
 3. The method of claim 1,wherein the account holder uses the transaction card to initiate thepurchase transaction, the transaction card associated with the creditaccount and the demand deposit account.
 4. The method of claim 1,wherein providing the authorization data for the purchase transactioncomprises determining whether the transaction amount is within aspending limit.
 5. The method of claim 4, further comprising: providingan alert notifying the account holder that the account holder isapproaching the spending limit.
 6. The method of claim 1, wherein acredit card interchange rate is imposed on the purchase transaction, thecredit card interchange rate being a percentage of the transactionamount.
 7. The method of claim 6, wherein a reward is provided to theaccount holder once the purchase transaction is completed.
 8. A systemfor processing a purchase transaction between an account holder and amerchant, the system comprising one or more computer processorsconfigured to: receive a purchase transaction initiation via a radiofrequency identification signal from a transaction card associated withthe account holder for the purchase transaction between the accountholder and the merchant; identify purchase transaction data comprising atransaction amount and data identifying the account holder in responseto the purchase transaction initiation; identify a credit account and ademand deposit account, the credit account and the demand depositaccount each associated with the account holder, the credit accountbeing associated with and including credit account data stored in one ormore memory units of a first financial institution and the demanddeposit account being associated with and including debit account datastored in one or more memory units of a second financial institution inresponse to receiving the purchase transaction initiation andidentifying the purchase transaction data; request from the firstfinancial institution payment of at least a portion of the transactionamount associated with the purchase transaction initiated by the accountholder with the merchant using the credit account in response toreceiving the purchase transaction initiation; request, from the secondfinancial institution, a request for an automated clearing housetransfer of the transaction amount from the second financial institutionto the first financial institution, the request made via an automatedclearing house network after a predetermined delay period; provideauthorization data to the merchant; initiate the predetermined delayperiod in response to providing the authorization data; receive anonline user interface on a device of the account holder, from the firstfinancial institution, to enable the account holder to review thepurchase transaction and determine whether to challenge the purchasetransaction, the online user interface including a hyperlink that whenclicked by the account holder initiates a challenge process indicatingthat the account holder believes the purchase transaction is fraudulent;automatically transmit the request upon expiration of the predetermineddelay period when the hyperlink is not clicked by the account holderduring the predetermined delay period; initiate a fraud resolutionprocess when the account holder clicks the hyperlink during thepredetermined delay period and automatically transmitting the requestwhen no fraud is determined during the fraud resolution process;initiate the fraud resolution process when the account holder clicks thehyperlink during the predetermined delay period and not withdrawing thetransaction amount from the second financial institution by notprocessing the request when fraud is determined during the fraudresolution process; complete the automated clearing house transfer viathe automated clearing house network; and cause one of the firstfinancial institution and the second financial institution to update thecredit account data and demand deposit account data stored in the one ormore memory units of the respective financial institutions byeffectuating an increase or decrease thereof, respectively, based on theautomated clearing house transfer of the transaction amount.
 9. Thesystem of claim 8, wherein the demand deposit account is a checkingaccount, savings account, or money market account.
 10. The system ofclaim 8, wherein the account holder uses the transaction card toinitiate the purchase transaction, the transaction card associated withthe credit account and the demand deposit account.
 11. The system ofclaim 8, wherein providing the authorization data for the purchasetransaction comprises determining whether the transaction amount iswithin a spending limit.
 12. The system of claim 11, further comprising:providing an alert notifying the account holder that the account holderis approaching the spending limit.
 13. The system of claim 8, wherein acredit card interchange rate is imposed on the purchase transaction, thecredit card interchange rate being a percentage of the transactionamount.
 14. The system of claim 13, wherein a reward is provided to theaccount holder once the purchase transaction is completed.
 15. Anon-transitory computer-accessible medium encoded with computer programcode configured to perform the following: receive a purchase transactioninitiation via a radio frequency identification signal from atransaction card associated with an account holder for the purchasetransaction between the account holder and a merchant; identify purchasetransaction data comprising a transaction amount and data identifyingthe account holder in response to the purchase transaction initiation;identify a credit account and a demand deposit account, the creditaccount and the demand deposit account each associated with the accountholder, the credit account being associated with and including creditaccount data stored in one or more memory units of a first financialinstitution and the demand deposit account being associated with andincluding debit account data stored in one or more memory units of asecond financial institution in response to receiving the purchasetransaction initiation and identifying the purchase transaction data;request from the first financial institution payment of at least aportion of the transaction amount associated with the purchasetransaction initiated by the account holder with the merchant using thecredit account in response to receiving the purchase transactioninitiation; request, from the second financial institution, a requestfor an automated clearing house transfer of the transaction amount fromthe second financial institution to the first financial institution, therequest made via an automated clearing house network after apredetermined delay period; provide authorization data to the merchant;initiate the predetermined delay period in response to providing theauthorization data; provide an online user interface on a device of theaccount holder, by the first financial institution, to enable theaccount holder to review the purchase transaction and determine whetherto challenge the purchase transaction, the online user interfaceincluding a hyperlink that when clicked by the account holder initiatesa challenge process indicating that the account holder believes thepurchase transaction is fraudulent; automatically transmit the requestupon expiration of the predetermined delay period when the hyperlink isnot clicked by the account holder during the predetermined delay period;initiate a fraud resolution process when the account holder clicks thehyperlink during the predetermined delay period and automaticallytransmitting the request when no fraud is determined during the fraudresolution process; initiate the fraud resolution process when theaccount holder clicks the hyperlink during the predetermined delayperiod and not withdrawing the transaction amount from the secondfinancial institution by not processing the request when fraud isdetermined during the fraud resolution process; complete the automatedclearing house transfer via the automated clearing house network; andcause one of the first financial institution and the second financialinstitution to update the credit account data and demand deposit accountdata stored in the one or more memory units of the respective financialinstitutions by effectuating an increase or decrease thereof,respectively, based on the automated clearing house transfer of thetransaction amount.
 16. The non-transitory computer-accessible medium ofclaim 15, wherein the demand deposit account is a checking account,savings account, or money market account.
 17. The non-transitorycomputer-accessible medium of claim 15, wherein the account holder usesthe transaction card to initiate the purchase transaction, thetransaction card associated with the credit account and the demanddeposit account.
 18. The non-transitory computer-accessible medium ofclaim 15, wherein providing the authorization data for the purchasetransaction comprises determining whether the transaction amount iswithin a spending limit.
 19. The non-transitory computer-accessiblemedium of claim 18, further comprising: providing an alert notifying theaccount holder that the account holder is approaching the spendinglimit.
 20. The non-transitory computer-accessible medium of claim 15,wherein a credit card interchange rate is imposed on the purchasetransaction, the credit card interchange rate being a percentage of thetransaction amount, and a reward is provided to the account holder oncethe purchase transaction is completed.